Global Foundry Industry’s Revenue Rises 27 Percent in Q3

The global foundry industry’s revenue grew 27% YoY and 11% QoQ in 3Q24, according to Counterpoint Research. The growth was primarily driven by strong AI demand and a faster-than-expected recovery in China.

Demand for leading-edge nodes, including TSMC’s N3 and N5 processes, continued to propel industry growth, supported by smartphone and robust AI semiconductor demand. Conversely, the recovery of non-AI semiconductors remained sluggish. The utilization rate (UTR) for global mature-node foundries, excluding those in China, stayed weak at the 65%–70% level. Within the mature node segment, demand for mature 12-inch nodes has shown better recovery compared to 8-inch nodes.

Notably, the recovery trajectory of China’s foundry and semiconductor market outpaced the global market. Chinese foundry players continued to demonstrate strong overall UTR recovery, rising to over 90% in Q3 compared to over 80% in the previous quarter. This performance was bolstered by the earlier-than-expected recovery of demand from China's fabless customers and semiconductor localization initiatives. However, since China’s foundry players have been aggressive in capacity expansion in mature nodes in the past several years, competition in mature-node foundries is set to intensify as more capacity comes online heading into 2025.

TSMC delivered a strong performance, exceeding expectations with robust gross margins. This success was primarily driven by high utilization rates at its leading-edge nodes, including N5 and N3, due to demand for AI accelerators and seasonal strength in smartphones. The company expanded its industry revenue share to 64% in Q3, up from 62% in the previous quarter. TSMC expects a significant rise in AI-related demand in the years ahead, with AI servers already making up the mid-teens of its 2024 revenue. The company expects this AI revenue share to grow further moving forward, driven by increasing adoption from cloud service providers and the emergence of practical AI applications.

Samsung Foundry’s revenue slightly increased sequentially primarily due to weaker-than-expected seasonal demand for Android smartphones. However, it managed to maintain its second position with a 12% market share. SMIC's results were robust, with the company reporting strong revenue growth driven by a recovery in demand across consumer electronics, smartphones, and IoT applications. UMC reported steady revenue growth, driven by strong demand for its 22/28nm nodes. GlobalFoundries delivered solid results, benefiting from strong wafer shipments and sustained pricing power.

“Strong demand for AI semiconductors is driving a robust growth in TSMC's leading-edge N5 nodes, which are crucial for powering next-generation AI accelerators and data centers. This surge in demand for advanced nodes is a key factor propelling the overall foundry industry’s growth, as AI applications continue to be a major catalyst for innovation. However, the oversupply in mature nodes, compounded by increased capacity at both Chinese and global mature node foundries, is creating challenges in that segment. While AI is propelling the semiconductor and foundry industry forward, players in the mature-node space will need to navigate these pressures to maintain profitability,” said Adam Chang, Research Analyst at Counterpoint Research.